I was fortunate enough to listen to Lidia Palubina (Senior Consultant, Kantar Consulting) when she presented at the pre-event seminars for PLMA 2019. I think most people know of Alibaba – an enormous online marketplace – but it was obvious from Ms Palubina’s presentation that anyone who doesn’t know of them, should and anyone who thinks they know, probably only know the half of it.
Personally, I saw the growth of Alibaba over decades selling anything from household cleaning products to industrial machinery, but what has become clear is that Alibaba has grown as a multi-platform enterprise to an enormous scale.
It’s now a C2C platform to rival eBay. Its Alipay payment system is a rival to (and some would say better than) Apple Pay. It’s a B2C platform to rival Amazon… in Asia. And it is probably that last piece that most would historically have challenged: “to rival Amazon”. This is because to many, Alibaba has not been seen as mainstream outside of Asia.
However, within Asia over 80% of online shoppers buy from Alibaba - that is more than the US and Western Europe use Amazon! Alibaba created the shopping event ‘singles day’ – a Valentine’s day offer for singletons which in 2018, generated sales of over $30Bn. That is 5x the equivalent value of sales from Black Friday.
It would probably surprise few that Alibaba is #1 for e-commerce in China. What might surprise is that it is now available in over 150 countries giving access to over 2Bn people.
Alibaba’s march into Russia is an illustration of what its scale can achieve. Launched there in 2010 primarily for cross-border sales from China to Russia, they had 200,000 users by 2012. From there, Alibaba entered into a joint venture with the Russian government which has taken them to the position of #10 website in Russia (after the likes of Facebook and Google) and the #1 e-commerce site in Russia.
Alibaba has launched a smart speaker (similar to Amazon’s Alexa) to put Alibaba in your home. I must admit, it could be fun to instead of say: “Alexa, please…” to be able to use Will Smith lines from the new Aladdin movie; although that may be unrelated!
Not only has Alibaba added countries such as Turkey, Italy and Spain to enable cross-border sales through their platform, using Alipay to partner with European retailers, Asian visitors can pay in Spanish stores with Alipay and those same retailers then have access to sell their products to Asia.
A measure of the scale is the recent announcement that Alibaba is building a 380,000m2 hub in Belgium just for ‘immediate orders’. To put that into context, apparently that is a warehouse/hub the size of 50 football fields! You may also have seen Alipay heavily advertised at this summer’s women’s football world cup.
It is unclear what impact we will see on the European and US retail markets, but it is certain that there will be an impact. I cannot remember the last retail conference that did not have a focus on Amazon but few mention Alibaba. Now there is not just Amazon - Alibaba is too big to ignore.